Beverages at a Crossroads: Five Challenges for the Industry

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For many long standing beverage producers, the industry is at a crossroads. Sugar and soft drinks are in the middle of an image crisis, and even sales of many juice products are slipping. Consumers have undergone a paradigm shift; more than ever before, beverage consumers are demanding health-focused innovation from producers. Consumer tastes are also becoming increasingly sophisticated, particularly in the growing craft beer and specialty coffee sectors. Here are some of the biggest challenges the beverage industry faces over the next few years.

Product Diversity

Larger drinks producers have been diversifying their product range for decades – sugar free, low sugar and caffeine free sodas have been on our shelves for some time. Smaller scale producers have largely escaped the pressure to offer multiple versions of each product. Now that artisan and small-scale beverages are competing on an increasingly even footing with drinks behemoths, they’re finding that the mainstream consumer prizes variety and flexibility. The challenge for smaller beverage producers is to leverage inventory management software and food manufacturing software to manage a larger number of product varieties within each product line without compromising on quality and while maintaining efficiency.

Waste Reduction

As competition heats up in the beverage market, bottlers are aggressively cutting waste to preserve already slim margins. Cutting inventory carrying costs is a major focus for many businesses, particularly beverage producers who often need to set aside large warehouse areas for bottles, cans and ingredients. Equally, a growing number of beverage manufacturers are taking a lean inventory management approach. This can involve just in time inventory, where stock is received only when it is needed, as well as using food manufacturing software to gear the production line for maximum flexibility and scalability.

Traceability with Beverage Manufacturing Software

With an increased focus on wellbeing and ethical consumption, the emerging beverage consumer is concerned about labelling and transparency. Consumers want to know whether their drinks are organic, contain GMO ingredients or are fair trade. While the coffee industry has been adapting to a widespread consumer preference for fair trade beans for over a decade, the mainstream beverage industry is only now responding to new trends such as fair trade sugar in soft drinks or fair trade, non GMO fruit in juices and smoothies. Meeting consumer expectations is likely to require a much higher standard of traceability than in the past – beverage producers should be able to trace products supply chains right back to the farm or field. Food manufacturing software is essential to achieve this standard.

E-Commerce and Subscription Services

Although most consumers still purchase the bulk of their food and beverages at grocery stores, some smaller beverage producers are getting good cut through by selling beverages direct to customers via e-commerce. Although this strategy is not viable for larger producers, boutique and artisan producers are able to use e-commerce to target niche consumer segments that have traditionally been spread too thin for grocery stores to cater to.

Smaller Serving Sizes

In a move to reduce energy and sugar consumption, mainstream beverage producers are regularly reducing serving sizes rather than tinkering too heavily with historically well-recieved recipes. This potentially increases beverage producers profits, so smaller bottlers will need to think carefully about how best to keep up.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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